Sarah Travers
Microsoft’s pursuit of Activision Blizzard has received a significant boost with a US judge dismissing the request from regulators to halt the acquisition.
The Federal Trade Commission (FTC) had expressed concerns about the $69 billion (£54 billion) merger, fearing it would lead to reduced competition in the market.
The judge’s decision indicates that Microsoft’s acquisition may proceed as planned, potentially marking the largest deal ever in the gaming industry.
To keep up with market leaders PlayStation and Nintendo in the fiercely competitive gaming market, Microsoft is heavily investing in gaming content. This strategy aims to attract players to Microsoft’s platforms, particularly the Xbox, over rival options.
Microsoft is eager to take control of Activision Blizzard’s extensive and highly successful game portfolio.
Activision Blizzard is the force behind renowned titles such as Call of Duty, World of Warcraft, Diablo, and Overwatch. Moreover, the company owns King, the mobile games developer famous for Candy Crush.
The regulators’ concerns were centered around the fate of the Call of Duty franchise.
Jim Ryan, the head of PlayStation, backed the regulators’ viewpoint and mentioned in a video deposition that Microsoft might restrict access to the series for PlayStation users or provide them with an inferior version.
Microsoft responded by offering Sony a 10-year licensing agreement for the game. They argued that it would be financially imprudent to limit access to a game with such a massive following.
Judge Jacqueline Scott Corley stated that the evidence presented during a week-long hearing in San Francisco failed to convince her that the FTC could substantiate its claims.
Judge Jacqueline Scott Corley found that the FTC had not presented enough evidence to support the claim that the merged company would likely exclude Call of Duty from Sony PlayStation or that its ownership of Activision content would significantly harm competition in the video game library subscription and cloud gaming markets.
Although this ruling is not the final resolution, as the FTC can appeal the decision and has challenged the merger separately in an administrative court proceeding.
The deal’s current form requires approval from regulatory bodies in the US, EU, and UK.
The European Union has already granted approval, while the UK’s decision to block the merger is currently under appeal.
Microsoft President Brad Smith announced that the company has agreed to temporarily halt litigation with the UK’s Competition and Markets Authority while working together to address concerns and make any necessary adjustments to the transaction.
Following the US court decision, Microsoft President Brad Smith highlighted the company’s attention to the UK, expressing their consideration of modifications to the transaction to address the concerns raised by the Competition and Markets Authority (CMA) in a manner acceptable to them.
If the deal falls through, Microsoft may be obligated to pay a $3 billion fee to Activision Blizzard.
Activision Blizzard CEO Bobby Kotick conveyed confidence in the merger, asserting that the combination of the two companies would bring benefits to consumers and workers. He emphasized that the merger would foster competition, preventing established market leaders from dominating the rapidly expanding industry.
The US judge’s decision to reject the regulators’ request to block Microsoft’s acquisition of Activision Blizzard significantly increases the likelihood of the deal progressing. As Microsoft strives to strengthen its position in the fiercely competitive gaming market, the acquisition of Activision Blizzard’s impressive game portfolio holds tremendous potential. However, the deal’s future hinges on obtaining regulatory approvals from the US, EU, and UK. With the outcome of this monumental deal still uncertain, the gaming industry and players worldwide eagerly await the resolution of these regulatory processes.
